Financial Literacy 2007 - Retirement
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Retirement planning strategies: 50 and beyond

"If I had my way I'd still be working," says Ringston, a former vice president of marketing and sales for a toy company, who retired in 1991. "I'd rather be with interesting people on an eight- to 10-hour day. I worked very hard in my life. It was fun and I made good money. There was the travel and the people were bright and creative and stimulating."

Ringston's wife, Pat, still works four days a week as a dental hygienist. He says she likes the people but finances, not social life, have motivated her to keep working. "She'd rather be home, but the pay is very good." Ray says she probably could quit work if the cost of living wasn't so high in Fairfield County, Conn., where they live.

Delaying retirement doesn't just impact earnings. It also affects Social Security benefits, which are based both on your earnings and age you start tapping into them. If you were born by 1938, you qualified for full benefits by age 65. But individuals born after then will have to wait longer -- up to age 67 for those born after 1960. If you draw benefits earlier, you'll see reduced benefits over your entire lifetime.

Meanwhile, other retirement funds, such as a 401(k), IRA and Roth IRA, generally make you wait until age 59½ before you can cash out. If you jump the gun, you'll usually owe a 10 percent early withdrawal penalty.

One bright spot: You may find it easier to find work, or stay at your current job, as you get older. Instead of pushing older employees out the door, many companies are finding that they need to retain experienced individuals to fill staffing gaps, says Tim Driver, CEO of

"It's a supply-and-demand issue," says Driver. "There's a much lower supply of younger people coming into work. Then, because of longevity, there's a whole new need for people to work longer. People find they didn't save enough. Work is a fundamental and new part of retirement."

5. Tackle debt

Part of the equation when you quit work is lingering debt. By the time you're 50 there are two big hurdles you may have left to clear: your mortgage and your own parents

Once, mortgage-burning parties were common, a fun way to celebrate the achievement of owning your home free and clear. But that rite of passage is becoming less common. Now nearly six out of 10 homeowners between the ages of 55 to 64 still owe on a mortgage, according to Harvard University's Joint Center for Housing Studies.

There are arguments both for and against paying off your mortgage as quickly as possible. You may well be able to earn more plowing money into the stock market. That, of course, is the argument made on paper. In real life, most retirees find it too difficult to quit and keep paying for their home. One analysis by Putnam Investments found that retirees who ended up going back to work had just 47 percent equity in their homes on average.

"It comes down to whether you look at your home as a home or an investment vehicle," says Vanguard's Rinaldi. "But going into retirement with a large mortgage is not the best situation."

6. Prepare for the unexpected

Safeguard your finances against unexpected medical costs, even if you're certain you'll be insured as a retiree. Many companies are scaling back lifetime health coverage for former employees. This year, 10 percent of companies expect to eliminate subsidized medical coverage for employees who would have been eligible, according to a 2006 study by insurer Kaiser Permanente.

That leaves you vulnerable to some hefty medical bills that can quickly eat up a lifetime of savings. A couple in their mid-60s will spend $215,000 out-of-pocket for prescriptions over their lifetime until age 84, according to one estimate by Fidelity Research. Then there's the stratospheric cost of extended care at nursing homes. It currently averages $74,445 per year and is rising, according to a study by New York Life. With that in mind, retirement planning must include some consideration of future medical costs.

One option is long-term health insurance, which pays for extended medical care including such things as nursing and assisted living. The downside is expense. Standard plans now run $1,985 a month and can be much more than that, depending on policy features. "It has to be easily affordable not just for today, but for whole premium period," says Marilee Driscoll, founder of Long-Term Care Planning Month, a public-awareness effort each October.

If you do want to buy, don't wait too long. Ray and Pat Ringston decided long-term care insurance was too pricey. But they did safeguard against health-care costs by purchasing an insurance policy that supplements their Medicare benefits with extra prescription drug coverage. "If I went to the pharmacy, instead of paying $40 I'd pay $5," says Ray Ringston.

"Retirement is like a two-edge sword," he says. On one hand, Ringston says, you're looking over your shoulder, concerned that something drastic could happen to you or to your partner, and you could be financially wiped out as a result. But, you're also enjoying the freedom of doing what you want.

Are you worried about having enough money to retire someday? Or, do you have a plan of action? Share your story

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